What R&D tax relief means now
Businesses still commonly search for “R&D tax credits”, but the rules have changed. For accounting periods beginning on or after 1 April 2024, claims are generally made under the merged R&D expenditure credit scheme or, for qualifying loss-making R&D-intensive SMEs, Enhanced R&D Intensive Support (ERIS).
The name of the scheme does not decide whether a project qualifies. The central question is whether the company sought an advance in science or technology and had to address scientific or technological uncertainty that a competent professional could not readily resolve.
Read Lexmore's guide to R&D tax reliefWhere qualifying R&D may arise in London
Software, AI, fintech and cyber security
R&D may arise where a team attempts to overcome genuine technological limitations in areas such as distributed systems, data processing, model performance, privacy, security, latency or interoperability. A new commercial workflow, financial product or use of an existing AI service is not sufficient by itself. The claim needs to identify the technological baseline and explain why the resolution was not readily deducible.
Life sciences and health technology
London's universities, hospitals and biomedical research organisations support businesses working in diagnostics, therapies, medical devices, clinical technology and health data. Potentially qualifying work may sit in experimental design, device or assay performance, scientific validation or difficult systems integration. Market research, regulatory submissions and ordinary product development need to be separated from the qualifying project.
Engineering, climate technology and advanced systems
Engineering and climate-tech companies may encounter qualifying uncertainty while developing new materials, energy systems, monitoring technology, control methods or manufacturing processes. The fact that a project has environmental benefits does not make it R&D; the scientific or technological advance remains the test.
Creative technology
London's creative industries frequently use sophisticated software and production systems. Qualifying R&D can arise in rendering, real-time production, image processing, data compression or technical workflow development, but creative originality and content production alone are not science or technology R&D.
Examples are not an eligibility test
The sector examples on this page illustrate where qualifying work can arise. A company does not qualify because it operates in a particular industry or location, and commercial novelty on its own is not enough. Eligibility depends on the project, the state of knowledge in the relevant field, the uncertainties encountered, the work undertaken and the costs claimed.
A London address is not evidence of an R&D claim
London has many technology businesses and advisers, but neither location nor growth stage establishes eligibility. Lexmore examines the work at project level, speaks with the competent professionals and distinguishes commercial innovation from the technical activity the legislation is intended to support.
Patent Box for London IP businesses
Patent Box can be relevant where a London company has developed or significantly contributed to qualifying patented technology and earns income from exploiting it. It is especially worth reviewing when R&D has moved from development into profitable products, licences or processes. The benefit depends on the qualifying IP profit and nexus calculation, not total company profit.
Explore Patent Box tax reliefR&D tax relief questions from London companies
Can a London software start-up claim for building its platform?
Not automatically. The relevant question is whether the work sought an advance in software technology and involved uncertainties that a competent professional could not readily resolve. Building a product using established methods is normally commercial development rather than qualifying R&D.
Can an outsourced development team be included?
Possibly, but the post-April 2024 contracting rules and restrictions on overseas activity require a careful review of who contemplated the R&D, what was contracted and where the activity occurred.
Does Lexmore work with our existing accountant?
Yes. Lexmore can undertake the specialist technical and financial R&D work while coordinating with the accountant responsible for the company's Corporation Tax return.
How Lexmore approaches a claim
Lexmore starts with an honest assessment of the project rather than an assumed claim value. We speak with the people who understand the technical work, establish the baseline that existed when the project began, identify the advance being sought and test whether the uncertainties meet the statutory definition.
We work with businesses across the UK and regularly travel to meet clients on site. Where practical, we prefer to see the operation for ourselves, meet the people behind the work and understand how the business develops its products, processes or technology. If an on-site visit would help us understand your R&D properly, we are happy to make that effort. Remote meetings remain available where they are more convenient or appropriate.
Where a claim is supportable, we then map the qualifying activity to the relevant costs, prepare the technical and financial evidence, support the Additional Information Form and work with your accountant on the Company Tax Return. Careful review is built into the process, and support is included if HMRC opens an enquiry into work we prepared.
Sources and further guidance
Unsure whether your project meets the R&D test?
Book a free initial assessment with Lexmore. You will get a straightforward view of the potential eligibility, the scheme and deadlines likely to apply, and what evidence a claim would need. If we do not believe the work qualifies, we will tell you plainly.